Federated Entrepreneurship

Written by Sean Murphy. Posted in Community of Practice, skmurphy, Startups

“Federated Entrepreneurship” was a phrase that William Krause used to explain 3Com’s model for management and innovation when he was CEO. Federation comes from a Latin word foedus for covenant or treaty and describes a union of partially self-governing units with a constitution that does not allow unilateral changes by a central governing body. It was a good model for the entrepreneurial business units at 3Com to pursue opportunities both independently and in concerted action.

I think it’s also a good model for what’s required to create an economically dynamic region. One parallel would be to a barn raising or Finnish talkoot, where a community comes together to solve an urgent problem that is beyond the means of a member or family in the community. As one of my old clients once remarked “it takes a village to raise a startup” and I think it takes a federation of entrepreneurs to improve the economy in a region.

Justin Bacon described this as a goal for his Minnesota Lean Startup Group in a comment on the LinkedIn Group

What we all hope to learn, the encouragement and advice that we give and/or receive, the lessons learned that we share and the relationships that we build, are as much about building this kind of community here locally as it is about helping us foster our own bootstrapped tech-startups.

I like the concept of simultaneously bootstrapping a startup and building a community. Many regions around the world aspire to improve the level of innovation and dynamism in their local economy. But the Silicon Valley model of technology entrepreneurship combined with risk capital is more than 100 years old: it can be traced to the founding of Federal Telegraph in 1909 (it’s noted by California Historical marker 836). Today’s efforts build on prior practices and institutions. See “Steve Blank on the ‘Secret History of Silicon Valley’“ for more details and the Silicon Valley Historical Society.

I think this means that each region needs to leverage its unique strengths new industries and local entrepreneurial activities. Put another way, Silicon Valley has already been invented, now we need to invent the regional models that will replace it.

It’s interesting that a number of the engineers behind the semiconductor revolution were from Midwestern Congregationalist Church backgrounds that emphasize a lack of hierarchy and a commitment to education and hard work. Some excerpts from Tom Wolfe’s “Robert Noyce and His Congregation” (a re-write of his earlier “The Tinkerings of Robert Noyce.”):

ROBERT NOYCE, INVENTOR OF THE silicon microchip and co-founder of Intel, grew up in Grinnell, Iowa, one of countless small towns in the Midwest that had been founded in the 19th century as religious communities by so-called Dissenting Protestants: Congregationalists, Presbyterians, Baptists, Methodists, and many others. What Dissenting Protestants dissented from was the Church of England and its elaborate ties to British upper-class life. […]

The Congregational Church had no hierarchy. Each congregation was autonomous. A minister was a teacher rather than a holy shepherd with a flock. Each member of the Congregation was supposed to be his own priest, in direct communication with God. […]

This attitude had a fascinating corollary in education. Back East, as in Europe, engineering was an unfashionable field for any truly gifted student to go into. It was looked upon as nothing more than manual labor elevated to a science.[…]

An extremely bright student, the one possessing the quality known as genius, was infinitely more likely to go into engineering in Iowa, Illinois, Michigan, or Wisconsin than anywhere Back East. As a result, the way to today’s Information Superhighway, more recently known as the Digital Revolution, was paved entirely by geniuses from the Midwest and farther west. […]

A decade later at Intel, Noyce decided to eliminate the notion of levels of management altogether. He and Moore ran the show; that much was clear. But below them there were only the strategic business segments, as they called them. They were comparable to the major departments in an orthodox corporation, but they had far more autonomy. Each was run like a separate corporation. Middle managers at Intel had more responsibility than most vice presidents Back East.

Joel Kotkin’s “Little Startup on the Prairie” has a section on “The Rise of the Brain Belt” (which builds on his earlier “The U. S. Brain Belt“) that outlines some other sources of opportunity:

“The Rise of the Brain Belt”

Perhaps even more important to the revival of the Heartland may be the growth of high-technology services and communications, energy production, manufacturing and warehouses as the critical levers for new employment and wealth creation. Only 10 percent of rural Americans live on farms and only 14 percent of the rural workforce is employed in farming. The area’s future clearly lies in the continued expansion of other industries.

The key to this growth is not merely cheap energy or labor; it’s the quality of the workforce. Although these areas are often seen as lacking in educated workers, many rural regions of the country—from New England to the Great Plains and even parts of the Sierras—actually have a surplus of skilled labor. The basis of this surplus lies in the high level of education among young people in many Heartland states. In virtually every measurement, students in key rural states—particularly the Dakotas, Iowa, Nebraska and Kansas—tend to perform better than those in more urbanized ones, as measured by graduation rates, college attendance and enrollment in high-level science and education programs.

[…] The Internet is rapidly diminishing the traditional near monopoly of information that throughout history has belonged to the metropolis; today a farmer, a securities dealer, a machine shop proprietor or a software writer in a small town enjoys the same access to the latest market and technical information as someone located in midtown Manhattan or Silicon Valley. “

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